Linda Norgrove was killed on Friday night when one of her captors detonated a suicide vest as Nato troops arrived by helicopter to rescue her.

Prime Minister David Cameron and Foreign Secretary William Hague defended the operation to rescue Miss Norgrove, saying it was "her best chance of safe release".

But The Sunday Telegraph has learnt that local Afghan leaders wanted to negotiate with Miss Norgrove's kidnappers to win her freedom but were overruled by Nato commanders who feared she was about to be smuggled to Pakistan and handed over to al-Qaeda militants.

The 36-year-old aid worker from Uig on the Isle of Lewis in the Outer Hebrides had been in Afghanistan since 2005, dedicating herself to improving the condition of its stricken people.

She was on her way to a ribbon-cutting ceremony for the Salar Canal, a 24km waterway providing irrigation for up to 8,500 farming families, when she was abducted on 26 September, alongside three Afghan nationals with whom she was working.

Miss Norgrove's name had not been revealed during her 13-day ordeal for fear of further jeopardising her safety.

Her parents had only recently recorded a video appealing for their daughter's release, but she was killed before the Foreign Office gave the go-ahead for it to be broadcast.

The operation to rescue Miss Norgrove began under the cover of darkness on Friday night after special forces pinpointed her location in mountains close to the Pakistan border.

They were within moments of reaching her when she was killed.

Troops who battled through small arms fire to reach the remote compound where she was being held discovered her lying on the ground mortally wounded. They tried to give her medical treatment but she succumbed to her wounds.

Six members of the gang are thought to have died during the fighting.

An official close to the operation said: "She was killed by an explosion probably caused by a suicide vest, held by one of the attackers. There was nothing about her injuries that suggested ISAF forces caused her death."

Prime Minister David Cameron said it had been "right to try" to secure Miss Norgrove's release.

He said: "My thoughts are with Linda's family, who will be devastated by this tragic news. She was doing valuable work for the Afghan people. Decisions on operations to free hostages are always difficult.

"But where a British life is in such danger, and where we and our allies can act, I believe it is right to try. I pay tribute to the courage and skill of all those involved in this effort."

William Hague, the Foreign Secretary, said: "Working with our Allies we received information about where Linda was being held and we decided that, given the danger she was facing, her best chance of safe release was to act on that information."

The Sunday Telegraph has learnt that in the days following her kidnap in the Kunar province of north-east Afghanistan a split developed between Nato and local police chiefs over the best strategy to adopt.

Nato commanders decided that any attempt to negotiate her release using the services of local intermediaries would take too long.

They feared her kidnappers were about to smuggle her across the border to Pakistan, where she could have fallen into the hands of al Qaeda sympathisers who would almost certainly have killed her.

That prompted them to go ahead with the risky bid to rescue her.

Miss Norgrove is the second British aid worker to have been killed in Afghanistan in recent months.

In August British doctor Karen Woo was shot dead along with nine colleagues in Afghanistan.

They were returning from providing medical assistance and supplies to poor Afghans in remote mountain communities, in an expedition organised by the Kabul-based charity the International Assistance Mission.

An experienced aid worker for US agency Development Alternatives Inc (DAI), Miss Norgrove was an experienced aid worker for US agency Development Alternatives Inc (DAI) and was wearing a burka in an attempt to conceal the fact she was a foreigner when the two car convoy she was travelling in was attacked.

Security guards accompanying Miss Norgrove chased after the kidnappers and were engaged in a brief firefight before the gang escaped with Miss Norgrove and three of her Afghan colleagues.

Given the mayhem in Kunar, it is hard to be sure who might have kidnapped her. Hostages are sometimes sold on, or bigger warlords may force a small gang to hand over a prize.

Most of the fighters in the province are loyal to an organisation called Hizb-I-Islami, extreme Islamists led by a veteran warlord, Gulbuddin Hekmatyar. He is a sworn enemy of America who has changed allegiance repeatedly over the years.

He was lavishly funded by the CIA when he fought the Russians in the 1980s, then became a Pakistani asset, then an Iranian one, and is now loosely allied with the Taliban.

Locals described the scene of the attack, close to a police checkpoint on the road between Jalalabad to Asadabad. as perfect for an ambush, with steep, boulder-strewn mountains on one side running right to the road and the Kunar river on the other.

"They would not have seen the kidnappers until they were on top of them," said one resident.

One local farmer told The Sunday Telegraph he had seen Miss Norgrove being led up into the hills after she was seized by between six and eight men, armed with Kalashnikovs and rocket-propelled grenade launchers.

Miss Norgrove was seated on a donkey, while her Afghan colleagues were on foot.

A Taliban commander claimed responsibility for the kidnap and said that he would exchange the aid worker for the jailed Pakistani scientist Aafia Seddiqui.

However other Taliban figures quickly denied his claim and said the movement had not been involved.

Her Afghan colleagues were freed on the morning of October 3, but under the media blackout imposed by the Foreign Office the development was not reported.

One of the freed Afghans said they had been held separately from Miss Norgrove and released through the mediation of local elders.

A string of kidnaps in the same province earlier this year had ended peacefully through the negotiations of local elders and the chief of police in Kumar province, Khalilullah Zaiyi, was confident a delegation of local leaders could secure Miss Norgrove's release.

Two days after she was taken Mr Zaiyi, who was assembling a hand-picked delegation of locals for the task, told The Sunday Telegraph: "We know where she is. We will solve this with the elders, not with force."

Speaking days before the attempt to free Miss Norgrove, the police chief in the Sawakai district, Major Maqsoud Padshah, said: "They were worried that if they waited to send in a delegation of tribal elders to talk, then maybe they would take her to Pakistan.

"They have had to act quickly, they have sent special forces here and an operation has begun."

On Thursday, the governor sent a 22-strong delegation of local tribal council members to attempt to speak with Miss Norgrove's captors. But by then the decision to mount the rescue mission had been taken.

Last night, Afghan government sources said Mr Zaiyi and governor of Kunar had both been angered by Nato's decision to send in special forces without waiting for their mediation.

An official told The Sunday Telegraph: "Nato didn't even ask their permission, they just sent in the special forces. We have solved this problem before with kidnappers, we knew what to do."

General David Petraeus, the senior Nato and US commander in Afghanistan, said his troops and the Afghan forces had done "everything in their power to rescue Linda".

He said: "Linda was a courageous person with a passion to improve the lives of Afghan people, and sadly she lost her life in their service. Our thoughts and prayers are with her family during this difficult time."

Mr Hague added: "Responsibility for this tragic outcome rests squarely with the hostage takers. From the moment they took her, her life was under grave threat. Given who held her, and the danger she was in, we judged that Linda's best chance lay in attempting to rescue her.

"I want to record my gratitude to our Nato allies and to the Afghan authorities and security forces for doing all they could to secure the safe release of Linda.

"Hostage taking is never justified and the UK does not make concessions to hostage-takers. But whenever British nationals are kidnapped, we and our allies will do everything in our power to free them.

"It is a tragedy that Linda was taken whilst doing the job she loved in a country she loved. Our thoughts are with her family and friends at this terrible time."

A report by USAID's Office of Inspector General two weeks ago highlighted concerns that payments were being made by Afghan subcontractors in Miss Norgrove's office to the Taliban to prevent them being attacked.

The report issued on September 29th showed that investigators found "pervasive fraud" in DAI'S Jalalabad office, where she worked, and also found that DAI employees were concerned that their subcontractors working on development projects may have paid off Taliban fighters.

There is no suggestion in the report that her kidnapping or death were connected in any way with the corruption claims.

DAI was targeted by insurgents when its offices in Kunduz, were attacked in July. During the raid Shaun Sexton, a 29-year-old security guard and former member of the Parachute Regiment who worked for DAI'S security subcontractor, Edinburgh International, was killed.

Three other security guards employed by the firm, two Afghans and one German, were also killed.

But despite the danger Miss Norgrove was determined to continue with her work.

A family friend in Miss Norgrov's home village of Mangersta said: "This is devastating. The family is very popular locally.

"Everybody really feels for them at this time. Linda was a very clever girl and had a real commitment to the Third World. They were a very close and caring family. It is terrible to think she died trying to help and make a difference in Afghanistan."

Keith Dodson, a local councillor, said: "It doesn't just hit the village, it hits the whole island. The whole family are well respected in the community. It's very, very sad.

"When things calm down there will be a huge funeral, so many people will want to pay their respects for someone who was trying to do good in this world."